A payment dispute over a sofa and a television should never become a life-altering felony and jail time. And police have more important work to do than collect debts for private industry.
Yet, in Texas, rent-to-own doesn’t always mean rent to own. More often than not, it means rent to overpay and perhaps rent indefinitely or go to jail if you try to end your rental contract.
It’s a shameful business model. Texas law, however, tilts unfairly against rent-to-own customers and allows rental contracts that are as predatory as high-interest payday and auto title loans. Add the threat of jail time for a broken contract — a sweetheart deal the industry 40 years ago wrangled from the state Legislature — and the rent-to-own industry has taken abusive lending to a disgusting level.
Lawmakers next session need to correct these injustices, which like payday loans occasionally snare middle-class victims but especially hurt the working poor, who live paycheck-to-paycheck and often lack bank accounts, strong credit or other financing options.
A joint investigation by the Texas Tribune and NerdWallet, republished in the Dallas Morning News, uncovered some egregious examples of lending abuses. Melinda Sandlin, a suburban Austin mom signed a rental agreement in 2014 thinking that she was making regular payments to buy a new $2,750 bedroom suite. After shelling out more than $3,000, she figured she had fulfilled her obligation. The company, however, told her that she had signed a rental agreement, and under threat of arrest, forced her to pay another $5,000. Not until she got an attorney involved — and agreed to return the furniture — did the company finally back off. So for $8,000, she has nothing.
It is not enough to urge customers to be wary of contracts that aren’t what they seem. Most people would think that rent-to-own contracts would eventually allow them to extinguish their debt and keep their couches or televisions. If a dispute were to arise over a car, the lender would repossess the vehicle, ding the borrower’s credit and seek compensation in a civil lawsuit. Instead, Texas law makes it difficult for borrowers to get out of predatory rental contracts, and even worse, it makes criminals out of hardworking people.
The Legislature created this problem in the late 1970s when industry lobbyists argued that that rental firms needed theft-of-service laws to protect them from customers who never intended to return leased equipment. Now the industry is tapping the generously broad law to make the criminal court system a collection agency, pursuing criminal charges against customers who are behind on payments with no intent to steal or have paid the value of the item several times over.
After reading the Texas Tribune/NerdWallet investigation, several lawmakers of both parties now say they will consider legislation to stop these abuses when the Texas Legislature meets again in 2019. We urge our North Texas delegation, especially leaders like state Rep. Eric Johnson, D-Dallas, an outspoken critic of payday lending abuses, to be part of the effort pressing for rent-to-own consumer protections. It’s wrong, now fix it.
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